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A manufacturer of ash drives has a prot function 7r = t 5g2 where t is the price charged for a ash drive and 5g2

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A manufacturer of ash drives has a prot function 7r = t 5g2 where t is the price charged for a ash drive and 5g2 is the cost of producing a drive whose capacity is g gigabytes. A consumer of type 6 has a utility function u = 9g 7 t, where 9 takes on a value of 14 for H-type consumers, or 8 for L-type consumers. There are 10 consumers of each type. A consumer gets zero utility if she does not buy. If a consumer is indifferent between buying two ash drives, assume she will buy the one with more gigabytes. If a consumer is indifferent between buying a ash drive and not buying, assume she will buy. Answer the following. If rounding is needed, round to 3 decimal points. a) (0.25 point) Suppose (ch, 5,5) is the optimal (prot maximising) capacity-price bundle for L-type consumer under complete information. What is the value of 1; ? b) (0.25 point) Suppose ((fH, 11) is the optimal (prot maximising) capacity-price bundle for Htype consumer under complete information. What is the value of 3? l: Now suppose the seller decides to offer a menu of capacity-price bundles (qL, tz) and (qH, tH ) to incentives the two types of consumers to sort themselves out. Answer part g) to i) in this context. g) (1 point) For H-type consumer, what is the optimal (profit maximising) level of qH ? h) (1 point) Suppose (q), t) ) is the optimal (profit maximising) capacity- price bundle for L-type consumer under asymmetric information. What is the value of t* ? i) (0.5 points) What is the seller's overall profit under asymmetric information if the seller offers a menu of profit maximizing capacity-price bundles (qL, tL ) and (qH, tH ) to consumers?c) (0.5 points) What is the seller's overall profit under complete information? For part d) - i), assume information is asymmetric. d) (0.5 point) Suppose that the seller continues to offer the capacity-price bundles that maximises his profit under complete information: that is, he offers (9 z, tz) and (q H, t H). What is the utility for the type Or consumer from buying the (q H, t H) bundle? That is, what is uL(q H , t H)? e) (1 points) What is the utility for the type OF consumer from buying the (9 [, tz) bundle? That is, what is UH(q L, tI)? f) (1 point) What are the seller's profits if he offers the bundles (q L, tz) and (9 H, t H) when information is asymmetric

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